Scottish Southern Energy (SSE) has been forced to ditch its MVNO plans with O2, Mobile understands.
The move follows an Ofgem ruling preventing energy providers offering more than five tariffs, which has impacted on SSE’s ability to provide mobile tariffs, sources say.
SSE is understood to be selling the assets of the MVNO, with BT and French operator Iliad tipped as interested parties.
Energy regulator Ofgem has laid out plans for tough new standards of conduct to ensure a simpler, clearer and fairer energy market.
The plans due to come into force shortly, involve a cap on tariff options to make it easier for consumers to compare contracts and shop around. The cap has impacted on SSE’s ability to operate an MVNO, sources say.
The ruling will come as a huge blow to both SSE and O2. The energy provider is understood to have spent around £25m on setting up the MVNO venture which was to be aimed at the energy giant’s 9.6 million customers.
The MVNO was planning to offer cut-price contract and prepay deals on a range of handsets on O2. It was also aiming to cross-sell to its customer base of which 200,000 already take fixed line and broadband services.
Sources say jobs at the MVNO are also set to go. The energy provider spent a considerable sum hiring a team of telecoms experts to support the launch of the MVNO. These include former Lycamobile commercial director Claudio Dolce, who is SSE’s telecoms director, and Gordon Souter, mobile enablement chief, whose former role was Vodafone’s MVNO partner solutions manager. Other recruits included MVNO chief architect Jonathan Milne and project manager Sue Cannings, who played a key role in setting up Vodafone’s MVNA partnership with Gamma in 2011.
Steve Heald, former Shebang commercial director, also joined SSE as telecoms sales director. reporting to commercial and retail telecoms chief Kushal Shah, former director at Vodafone MVNO Desi Mobi.
One source said: ‘SSE has pulled out after spending a fortune on this venture due to the Ofgem ruling on tariff numbers. It is trying to sell the assets with a number ofinterested parties. It has a full national roaming asset so the likes of BT could swing it over to EE’s network.’
The source added that the Ofgem ruling would prevent other energy giants from considering a similar MVNO venture.
The failure of the MVNO will also come as a blow to O2’s MVNO team which has a reputation for being highly selective in the MVNO partners it choses and for building solid blue chip MVNOs such as the Tesco Mobile MVNO.
Both SSE and O2 were unavailable for comment.